My father has given his old ancestral property to a builder to develop a small 4 storied apartment on 50-50 partnership. He received 2 flats and sold one , while staying at the other one. He spent some money on the newer apartment (interior + transfer of property from siblings using a gift deed).
How can he save capital gain tax for the sold property?
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Ancestral property sell tax
Replies (2)
Quick Summary
Purchase another house property.
Joint development of ancestral property:
• Giving ancestral land to a builder under a joint development agreement (JDA) in exchange for flats (e.g. 50% share): under Sec 45(5A) (for individuals or HUFs, with a registered JDA), capital gains arise in the year the completion certificate is issued. The consideration is the stamp duty value of the flats received (plus any cash) on that date.
• Cost of the land: the previous owner's cost, or FMV as on 1 April 2001 (ancestral). Holding period includes previous owners'.
• The flats received have a cost equal to the 45(5A) consideration. Their later sale is a separate gain.
• If the land is HUF property, the HUF is taxed. If inherited by the father individually, he's taxed.
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